Senate panel OKs altering car tax

State senators got moving Thursday on legislation to ax the annual “birthday tax” on cars as the end of the 2009 session draws near.

The bill to eliminate property taxes on cars, dubbed the “birthday tax” because they are due on the owners’ birthday, passed the House two weeks ago. Little has been heard of it since then.

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But the Senate Finance Committee unanimously backed House Bill 480 Thursday after an hourlong hearing in which city and county officials raised concerns that local governments could lose money on it in a few years.

Senate Majority Leader Chip Rogers (R-Woodstock) said the bill never was intended to provide a windfall for local governments.

“I would have a difficult time supporting this if it were not revenue neutral or a decrease [in taxes],” Rogers said.

The question now is whether the bill will make it to the Senate floor for a vote before the session is scheduled to end April 3.

Lt. Gov. Casey Cagle, the Senate’s president, hasn’t taken a stand on the bill. However, House members blamed Cagle for stalling a similar measure at the end of last year’s session.

Under the bill that has been revised since it passed the House, Georgians buying cars would pay a title fee of 7 percent of the value of their car, up to a maximum of $1,500. The cap was lowered from $2,000, despite complaints that even that would give big tax breaks to Georgians who buy expensive vehicles.

In return for the title fee, people buying cars would not have to pay property taxes on the vehicles they purchase and wouldn’t have to pay a sales tax.

Georgians would continue to pay property taxes on the cars they currently own.

While car dealers might be helped, the bill initially would increase the cost of buying a car from a private individual. Under the bill, people who buy a car from a neighbor or someone who placed a classified ad would have to pay the new 7 percent fee on the car’s value.

Originally the bill would have applied to all cars bought starting next year. However, House Motor Vehicles Chairman Tom Rice (R-Norcross) said it was changed to cover cars bought starting Jan. 1 of this year so Georgians wouldn’t wait until next year to buy vehicles to reap the benefits of the legislation.

If the bill passes, people who already have bought a car this year could count any sales taxes and property taxes they’ve paid on it against the title fee.

Rice said the change was made because car dealers need all the help they can get now.

“They are under enough pressure with the economic situation,” he said. “We wouldn’t want to do anything to push them over the edge.”

Lobbyists for the state’s county commissioners and cities said their organizations opposed the bill.

Clint Mueller, a lobbyist for the Association County Commissioners of Georgia, said his group “had long-term concerns whether it will replace the lost revenue.”

Local governments earn money from both the annual property taxes on cars and sales taxes.

An analysis of the bill suggests state and local governments would raise more money under House Bill 480 than they do in the current system. Lawmakers already have promised to spend extra state revenue on a trauma health care system.

However, after a few years, local government officials fear they will take in less money because more and more Georgians will be paying only the one-time title fee and ever fewer vehicles will be subject to annual property taxes.